UK banks will face annual stress tests for the first time to see if they could survive a major collapse in financial markets or the economy, the Bank of England has said.

The results of these stress tests will be made public and, if they are found wanting, banks will have to show what they have done to bolster their balance sheets.

UK banks could be required to hold more capital than their international rivals, as the Bank said: "At the very least, banks would need to maintain sufficient capital to be able to absorb losses in the stress scenario and not fall below internationally agreed minimum standards."

Mark Carney, governor of the Bank, said: "This will materially strengthen the Bank's analytical capability to assess risks to resilience."

The Bank made it clear that as stress tests come in they will not be used to give mere "pass or fail" results. Rather, the Bank, through its financial policy committee and the Prudential Regulation Authority, would be able to order individual banks to increase their capital in specific areas and even demand management changes.